Coinbase goes public: What you need to know, and what it means for cryptocurrency

the largest exchange of digital tokens like bitcoin in the united states is now worth a lot of real dollars too. coinbase, a cryptocurrency trading platform, debuted on the nasdaq on Wednesday. The moment had been touted as a milestone for the acceptance of cryptocurrencies by financial institutions and the general public, as Coinbase is the first major cryptocurrency company to operate in the US. uu. bag. here’s what you need to know about how coinbase worked, how this supposedly legitimizes cryptocurrencies, and what all the memes are about.

what is coinbase?

Reading: What does it mean that coinbase is going public

coinbase is an online platform where users can buy and sell any number of cryptocurrencies, including bitcoin, ethereum, and litecoin. It is the largest cryptocurrency exchange in the country and was founded in 2012 by entrepreneurs Fred Ehrsam and Brian Armstrong, who currently serves as CEO of the company. In the early years of bitcoin, it was virtually impossible for people with no coding experience to use the currency; Coinbase’s goal was to provide laypeople with a more accessible platform. It now has around 56 million verified users and had a trading volume of $193 billion in 2020. As it has become more prominent, Coinbase has also had some controversies, including last summer when Armstrong faced backlash for refusing bids. employee requests to support black lives. summer.

How did it go?

coin opened at $381 per share, peaked at $429.54, and then closed at $328.28, giving it a valuation of $85.8 billion, rivaling those of facebook and airbnb during their debuts. the nasdaq had previously given coinbase a reference price of $250. coinbase opted to pursue a “direct listing,” meaning the company did not involve banks in the underwriting and is allowing early investors to convert their holdings into shares that can be traded on the market. While rare, the practice has caught on among big tech companies like Spotify and Slack, in part because it allows for less public scrutiny in the run-up to a market debut. coinbase is the largest company ever to go public with a direct listing.

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crypto still images seem incomplete to me. Is this stock incomplete?

Unlike other major tech companies, coinbase is going public while also posting profits. it had revenue of $1.28 billion in 2020, of which it made a profit of $322.3 million. Publicly traded companies without a clear path to profitability, such as Uber, Lyft, Snap, and Twitter, will often see their shares plummet after initial investor enthusiasm wears off. coinbase also has a growing interest in cryptocurrencies among the public, as well as a growing footprint in the tech industry. for example elon musk recently ordered tesla to buy $1.5 billion worth of bitcoin which has been hitting record prices lately, and nft art a type of crypto token (depending on who you ask, possibly stupid) is doing a great splash. At the same time, coinbase’s revenue is, for better or worse, tied to the notoriously volatile prices of cryptocurrencies. As the company pointed out in its presentation before the SEC, “our net income depends substantially on the prices of crypto assets and the volume of transactions carried out on our platform. if such price or volume declines, our business, results of operations and financial condition would be adversely affected.” coinbase may also be seeing a lot more competition in the new future, with financial giants like fidelity also looking to form cryptocurrency trading businesses. New entrants may force Coinbase to significantly reduce its transaction fees, which accounted for 96 percent of its sales in 2020, though Armstrong says he aims to reduce that to just 50 percent by diversifying the business in the next five to 10 years.

So maybe this will make cryptocurrencies… less sketchy?

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That’s the idea. “Hopefully Coinbase goes public and its direct listing is seen as kind of a historic moment for the crypto space,” Armstrong said in an interview. Institutional financial players like fidelity, jpmorgan, and goldman sachs have been dabbling in the space, and coinbase’s arrival on the nasdaq could be yet another step toward wall street embracing cryptocurrency, although there is still a fair amount of skepticism among some analysts at that the market will not implode. however, for the time being, it allows investors who don’t normally touch cryptocurrencies to gain indirect exposure to the industry. It might even inspire some of those investors, who might see coinbase’s debut as an additional layer of validation for cryptocurrencies in general, to get involved in the market as well. bitcoin notably hit a record price of $62,741 on Tuesday, a feat no doubt related to the coinbase listing. ethereum also reached a high of $2205.

How have cryptocurrency enthusiasts reacted to the news?

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Overall, the meme-loving cryptocurrency community seemed pretty excited about the whole thing, although some were perturbed by the idea of ​​people buying shares of coinbase instead of the cryptocurrency it sells. here is a selection of reactions from cryptocurrency enthusiasts:

$coin at $420, it’s all a meme pic.twitter.com/rdhq2r6fxy

$coin, can we change this? pic.twitter.com/x3x1mldxs6

waiting for the coinbase ipo $coin pic.twitter.com/2ndg7hvs7r

wen coin $coin 😵 stonks pic.twitter.com/qqlntnpwbp

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.

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